Conflict of interest claims thicken tangled web at LGC

Communities question law firm representing insurer

CONCORD — Eight days after a group of communities filed suit against municipal insurer the Local Government Center, claiming they're wrongfully excluded from receiving refund payments, some are now wondering whether the law firm they hired has a sudden conflict of interest.

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By Elizabeth Dinan

seacoastonline.com

By Elizabeth Dinan

Posted Aug. 16, 2013 at 2:00 AM

By Elizabeth Dinan
Posted Aug. 16, 2013 at 2:00 AM

» Social News

CONCORD — Eight days after a group of communities filed suit against municipal insurer the Local Government Center, claiming they're wrongfully excluded from receiving refund payments, some are now wondering whether the law firm they hired has a sudden conflict of interest.

The group filed suit Aug. 5 in Strafford Superior Court through the Concord law firm of Douglas, Leonard and Garvey. On that date, a press release was issued stating the contact person to discuss the case was attorney Richard Lehmann, who, for the past seven years, has been legal counsel to the state Senate. Lehmann was appointed to that post by Senate President Peter Bragdon, who was named executive director of the LGC on Tuesday.

The potential conflict of interest "is an issue we'll have to look into," said Todd Selig, town administrator of Durham, one of the communities that filed suit against the LGC.

"Our coalition wants to ensure we do things right," Selig said. "Fortunately, (Lehmann's law partner) Chuck Douglas is also working with us on the LGC return of surplus issue, and there are other attorneys in the Douglas firm in the event it is determined a conflict (of interest) exists."

Asked for comment, Lehmann said, "I am not prepared to comment on the record at this time."

Bragdon said Wednesday it's his understanding that Lehmann is "looking into it to see if there's a conflict." Bragdon also said he consulted with Lehmann before accepting the LGC job to inquire about any potential conflicts of interest on his part, but didn't name the LGC. The Senate president said he asked Lehmann about taking a position with the state, that may have lawsuits involving the state, and Lehmann advised it did not sound any different than any other legislator who discloses a conflict and recuses himself or herself when a conflict of interest arises.

"It happens all the time," Bragdon said.

Last year, a hearings officer ordered the LGC refunds after finding in favor of the N.H. Secretary of State's Bureau of Securities Regulation, which proved the LGC illegally collected and banked tens of millions of dollars in surplus paid by municipal customers, retirees and public workers.

A municipal insurance pool, the LGC was ordered to refund $52 million to member cities and towns for the overpayments, and has until the end of this year to make the payments.

The LGC sells health, dental and property liability insurance. The suing communities seek to stop the LGC from mailing refund checks this month on the grounds that they were wrongfully excluded because they withdrew as LGC customers before the June 14, 2010, effective date cited in the officer's order.

Andru Volinsky, special counsel for the BSR, said the communities' argument is flawed because the state did not have authority over the LGC before June 14, 2010.

"If we went earlier, we would have been subject to a constitutional challenge," Volinsky has said.

Douglas, Lehmann's law partner, argues in court documents that the refund payments should be made according to how much money communities contributed toward LGC insurance, not whether they were active LGC policyholders on the date the refund order was made.

The suing communities are Durham, Salem, Peterborough, Concord, Northfield, Temple, Meredith, Plainfield, Bennington and Auburn. They previously brought their case to the state Supreme Court which, Selig said, gave "a clear directive" that the legal argument belongs at the Superior Court level.

The LGC has released ratings of cities and towns that will receive refunds for overpayments made for the purchase of LGC insurance during 2010 totaling $33.2 million. Checks are scheduled to be mailed Aug. 27. The refunds are in addition to refunds announced by the LGC in December for surplus paid by communities during 2011.